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Tax reform law means opportunity and success for dealerships

December 29, 2017
By Mark Scarpelli, 2017 NADA Chairman
 
The nation’s auto dealers should have a happy holiday season thanks to efforts by the National Automobile Dealers Association and my fellow dealers to ensure that our priorities were accounted for in comprehensive tax reform legislation. 
The Tax Cuts and Jobs Act, passed in December, included an NADA-supported amendment to preserve 100-percent deductibility of floor plan loan interest. Thanks to a concerted effort by dealers all over the country, this critical provision was included in the legislation.
Preserving floor plan deductibility was one of the NADA’s top priorities for tax reform. In the original Senate bill, the interest deductibility was slashed to 30 percent of adjusted taxable income, which would have crippled many dealers and created the risk of paying higher taxes even if a dealership does not show a profit.
Not since the Great Recession has there been such a do-or-die moment for our business. Thanks to a lot of hard work, the final Senate bill (as well as the final House tax reform bill) recognized that small-business dealers use floor plan loans to finance our high-cost inventory and are different than big corporations. Limits on floor plan deductibility would have disproportionately harmed many of our small businesses which are critical to Main Street America. 
While challenging, this moment also presented an enormous opportunity to educate members of Congress on how our business operates. I’d like to thank my fellow dealers who worked tirelessly to reach out to key legislators and explain the unreasonable burdens presented in the original Senate bill. The floor plan loan is the economic cornerstone of the franchised dealership. 
This critical amendment was more than just another tax issue to us. The way we’ve done business for decades was at stake. Without it, many of us would not be able to afford the vehicles that sit in our showrooms and lots — the vehicles customers come to buy. Preserving full deductibility of floor plan interest helps preserve auto sales, dealership jobs and tax revenue for our state and local governments. 
The NADA’s strong grassroots efforts played a huge role in this victory. Dealers across the country contacted their respective elected officials to voice their concerns. 
 
 

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